Correlation Between Microsoft and Regenx Tech

Can any of the company-specific risk be diversified away by investing in both Microsoft and Regenx Tech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Regenx Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Regenx Tech Corp, you can compare the effects of market volatilities on Microsoft and Regenx Tech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Regenx Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Regenx Tech.

Diversification Opportunities for Microsoft and Regenx Tech

0.3

Correlation Coefficient

Microsoft  Regenx Tech

Weak diversification

The 3 months correlation between Microsoft and Regenx is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Regenx Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regenx Tech Corp and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Regenx Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regenx Tech Corp has no effect on the direction of Microsoft i.e., Microsoft and Regenx Tech go up and down completely randomly.

Pair Corralation between Microsoft and Regenx Tech

Given the investment horizon of 90 days Microsoft is expected to generate 16.52 times less return on investment than Regenx Tech. But when comparing it to its historical volatility, Microsoft is 12.02 times less risky than Regenx Tech. It trades about 0.05 of its potential returns per unit of risk. Regenx Tech Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.09  in Regenx Tech Corp on September 3, 2024 and sell it today you would lose (0.04) from holding Regenx Tech Corp or give up 3.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Regenx Tech Corp

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Regenx Tech Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regenx Tech Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Regenx Tech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Regenx Tech

The main advantage of trading using opposite Microsoft and Regenx Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Regenx Tech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Regenx Tech will offset losses from the drop in Regenx Tech's long position.

The idea behind Microsoft and Regenx Tech Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.